SAVE YOUR $100K: MBA LESSONS FOR HACKERS

For more information, please contact Leonard Fishman at lenny@pledge4good.com or Vikram Bellapravalu at vik@pledge4good.com.

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WALL STREET TO VIA AN MBA

Tracer Capital Management

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THE REALITY: MBAS CAN CREATE GREAT COMPANIES

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#1: THE BEST WORKPLACES HAVE COMMON TRAITS

Start-up / entrepreneurship implication: HR, culture

Meaningfulness

Responsibility

Knowledge of Results

Skill variety

Task significance

Autonomy

Feedback

Motivated Employees

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#2: VIRALITY DOESN’T JUST HAPPEN

Start-up / entrepreneurship implication: marketing

Source: Jonah Berger. Wharton School.

Advertises

Itself Social

Currency

Practical

Value Emotion

Common

Ground Triggers

Story

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#3: CONSUMERS AREN’T STRICTLY RATIONAL

Start-up / entrepreneurship implication: pricing policy

Prospect Theory Hyperbolic Discounting

Mental Accounting Odd Number Pricing

Source: Wikipedia: http://en.wikipedia.org/wiki/Prospect_theory; http://en.wikipedia.org/wiki/File:Hyperbolic_vs._exponential_discount_factors.svg

AOV >

AOV

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#4: FOCUS ON INDIVIDUAL DYNAMICS

Aggregate retention rates typically observed as stable over time…

Source: Peter Fader. Bruce Hardie. Available: http://www.brucehardie.com/talks/cba_workshop_paris_2007_handout.pdf

Start-up / entrepreneurship implication: marketing

…but generally see increasing retention amongst cohorts…

…CLV calculation using aggregate

measures underestimates badly

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•  Under- or over-capacity is a

business model flaw

•  Buy inventory up to

•  Newsvendor Critical Ratio:

•  CU – lost revenue from under-

ordering inventory

•  CO – cost of over-ordering

inventory

#5: THINK CRITICALLY ABOUT INVENTORY

Start-up / entrepreneurship implication: server capacity, inventory management

€

F(Q) =Cu

Cu +CO

€

X* = µ +σ*Q

Source: http://members.pioneer.net/~mchumor/business_inventory_toons.html

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•  Only require:

•  Mutual ascent – offer,

acceptance

•  Consideration

•  Legality

•  Capacity

#6: CONTRACTS DON’T HAVE TO BE WRITTEN

Start-up / entrepreneurship implication: customer, employee, supplier management

Source: http://www.cartoonstock.com/directory/o/oral_contracts.asp

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#7: LITIGATION IS A BUSINESS TACTIC AND A PRICEABLE RISK

Start-up / entrepreneurship implication: legal

Source: Wharton School. LGST621. Winter 2011.

Founder

100%

Equity Ownership

Founder

100%

Equity Ownership

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#8: FUNDING CONVERTS YOUR EQUITY INTO A DEEPLY OUT OF THE MONEY OPTION

Start-up / entrepreneurship implication: ownership

Perceived - $100K Initial Capitalization

Actual - $100K Initial Capitalization

Investors

100%

Equity Ownership

Founder 80%

Investors 20%

Equity Ownership $1MM “A” for 20%; 2x Pref.

$1MM “A” for 20%; 2x Pref.

Founder with Call

Option with

$2.0MM Strike

APPENDIX

For more information, please contact Leonard Fishman at lenny@pledge4good.com or Vikram Bellapravalu at vik@pledge4good.com.

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PERSUASION CAN BE LEARNED

Start-up / entrepreneurship implication: negotiations, email marketing, cold calling

Source: Cialdini. “Harnessing the Science of Persuasion.”

Persuasion Weapon Example

Liking “We’re developers like you”

Reciprocity “We’re offering a major discount, so prepay today”

Social proof “We have 75% of the Fortune 100”

Consistency “Commit to a monthly $10.00 donation today”

Authority “Our team consists of 10 PHDs”

Scarcity “Request a beta invite today”

CONTACT DETAILS

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www.pledge4good.com www.facebook.com/pledge4good @pledge4good

Vikram Bellapravalu vik@pledge4good.com 646.238.5098